• Poland's top refiner says value of oil in its tanks declines
  • Adjusted earnings in line with expectations amid weak quarter

PKN Orlen SA, Poland’s biggest refiner, missed analysts’ expectations by more than half, after a decline in the oil price cut the value of crude in its tanks. The shares dropped.

The first-quarter profit fell to 337 million zloty ($89 million) from 756 million zloty a year earlier, the company said in a regulatory filing. That missed the average estimate of 786.7 million zloty of seven analysts surveyed by Bloomberg. The operating earnings before interest, taxes, depreciation and amortization adjusted for oil price swings, or so-called Ebitda LIFO, stood at 1.93 billion zloty, little changed from a year earlier.

“The impact of the oil price on the value of crude in storage was bigger than anticipated, but Ebitda LIFO, at which the market is looking, was in line with the expectations,” Krzysztof Pado, an analyst at Dom Maklerski BDM SA, said by phone. “If one takes into account that it’s a seasonally weak quarter and that the Litvinov Czech unit was halted, the results are quite good.”

The drop in the oil price in the first three months of this year, which on average traded 20 percent below the fourth quarter, slashed its Ebitda by 937 million zloty. This compares with an impact of 60 million zloty a year earlier. The Litvinov steam cracker, which caught fire in August, is set to regain its full capacity at the end of October, Orlen’s Czech unit Unipetrol AS said.

“A miss on the bottom line is large but we note it is related to a higher than anticipated LIFO effect, a non-cash item,” Lukasz Janczak, an analyst at Haitong Bank SA in Warsaw, said in a note. “The operating figures look strong, slightly better than anticipated, both by us and the market.”

The shares retreated 1.8 percent to 72.15 zloty at 10:02 a.m. in Warsaw, the steepest drop since April 12, trailing a 0.2 percent gain in the country’s benchmark stock gauge WIG20 Index.

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